HOME TRUTHS - In a world increasingly dominated by politically correct strictures, few in business are happy to dwell for long on the subject of racial and national barriers. You hear the occasional euphemistic reference to 'clashes of culture', but big c

by JEFF RANDALL, BBC's business editor
Last Updated: 31 Aug 2010

In a world increasingly dominated by politically correct strictures, few in business are happy to dwell for long on the subject of racial and national barriers. You hear the occasional euphemistic reference to 'clashes of culture', but big company bosses prefer to talk more about the benefits of globalisation and world networks than the difficulties of dealing with foreigners.

It's a bit like the Fawlty Towers sketch, where Basil is faced with some German tourists and rushes around screaming at his staff: 'Don't mention the war!'

Avoiding the issue, however - as Basil discovered - does not make it go away. Look around the multinational scene and you will see plenty of examples of severe corporate problems directly related to attitudes that can be summed up as 'we don't like them' and 'they don't understand us'.

Whether this can be ascribed to ignorance, tribalism or basic prejudice does not really matter The fact is that the world is not one big happy family and doing business with those whose attitudes, behaviour and beliefs are at best irritating and at worst offensive poses a serious test for management.

Nobody, it seems, is comfortable talking about, much less analysing, national characteristics. Yet only a fool would say that the Russian mindset is the same as that of the Burmese. Nevertheless, inside many big companies it is just not politically acceptable to categorise certain peoples as lazy or aggressive or untrustworthy - even if it is true.

Take the Germans. Their swaggering style, which works so well for them inside their own country, has run into tremendous difficulties overseas. Three examples come to mind: Deutsche Bank's purchase of merchant bank Morgan Grenfell; BMW's acquisition of Rover; and Daimler's so-called merger with America's Chrysler (it was really a German takeover).

Each case is different, but the theme running through all three is that German executives thought they could impose German business methods on foreign managers and workers. This led to misunderstanding and deep resentment.

At Morgan Grenfell, a much trusted City brand name was blown away as Deutsche insisted on standardising behaviour. The flourish with which Morgan's Masters of the Universe used to execute deals was lost in an ill-starred search for Teutonic efficiency. A former Morgan director told me: 'We learned to detest the Germans; they were so one-dimensional.'

At Rover, BMW's ruling Quandt family nearly wrecked its fortunes before throwing in the towel. A simple but misplaced conviction that German engineering excellence could be bolted onto a venerable, albeit flawed, British marque resulted in a commercial fiasco. BMW's management just had no feel for another country's midmarket product, even less for the factory workers who were making it.

'The Germans were talking to us in perfectly good English, but it might just as well have been Swahili for all the sense they were making,' said a Rover veteran. 'They didn't get us and we certainly never got them.'

One look at Daimler Chrysler's share price makes it clear that the Germans have another disaster on their hands. The rationale for merging was at first compelling; German manufacturing expertise allied to American marketing skills would produce a world-beater. Instead, confusion about what the twin-headed company stands for and where it is going has led to massive erosion of shareholder value.

Daimler boss Jurgen Schrempp has learnt the hard way that American bonhomie counts for little when big bucks are at stake. As British property tycoon Gerald Ronson (no shrinking violet) discovered to his cost, 'doing business in America is like swimming in a shark pool: you can get eaten alive.' Ronson, who has many American friends and enjoys holidaying in the States, all but destroyed his family's empire as a result of an injudicious transatlantic foray.

Schrempp's problems, however, have a more sinister dimension. Even 55 years after the event, many Americans still hold vivid memories of world war two and don't like the idea of being bossed about by Germans. The race-relations industry squirms at such talk, but blockbusting movies like Steven Spielberg's Saving Private Ryan are hardly conducive to a forgive-and forget attitude. Americans are brought up to believe the American Way is best; they have an unquestioning faith in their country's world leadership. Learning to take orders from foreigners runs counter to US culture.

Such is the fear these days of being branded a racist that many managers find issues of nationality, identity and religion uncomfortable and difficult. The natural temptation is to cop out and pretend they don't exist.

But they do, and sweeping them under the carpet only makes matters worse.

When the late Lord Ridley said European monetary union was a German-run racket, he was condemned by polite society for brutal tactlessness. But, in the privacy of their own homes, I wonder how many British voters would agree.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

A leadership thought: Treat your colleagues like customers

One minute briefing: Create a platform where others can see their success, says AVEVA CEO...

The ignominious death of Gordon Gekko

Profit at all costs is a defunct philosophy, and purpose a corporate superpower, argues this...

Gender bias is kept alive by those who think it is dead

Research: Greater representation of women does not automatically lead to equal treatment.

What I learned leading a Syrian bank through a civil war

Louai Al Roumani was CFO of Syria's largest private retail bank when the conflict broke...

Martin Sorrell: “There’s something about the unfairness of it that drives me”

EXCLUSIVE: The agency juggernaut on bouncing back, what he would do with WPP and why...

The 10 values that will matter most after COVID-19

According to a survey of Management Today readers.